Public Bill Committee

[Sir Nicholas Winterton in the Chair]

Written Evidence to be reported to the House.

PE 20 Royal London Group

Nicholas Winterton: First, I would like to say that the Minister for Pensions Reform, the hon. and learned Member for North Warwickshire (Mr. O'Brien) sadly cannot be here this morning, though I understand he intends to be here this afternoon, because of a family bereavement. I am sure all members of the Committee will join me in extending to him our sympathy for the loss that he and his family have sustained.
Clause 8

information to be given to jobholders

James Plaskitt: I beg to move amendment No. 123, in clause 8, page 5, line 2, at end insert—
‘( ) for all workers to whom section [Workers without qualifying earnings] applies to be given information about the effect of that section in relation to them;’.

Nicholas Winterton: With this it will be convenient to discuss the following amendments:
Government amendments No. 124 to 134
New clause 8—Workers without qualifying earnings
‘(1) This section applies to a worker—
(a) to whom paragraphs (a) and (b) of section 1(1) apply (working in Great Britain and aged between 16 and 75),
(b) to whom paragraph (c) of section 1(1) does not apply (qualifying earnings), and
(c) who is not an active member of a pension scheme that satisfies the requirements of this section.
(2) The worker may by notice require the employer to arrange for the worker to become an active member of a pension scheme that satisfies the requirements of this section.
(3) The Secretary of State may by regulations make provision—
(a) about the form and content of the notice;
(b) about the arrangements that the employer is required to make;
(c) for determining the date with effect from which the worker is (subject to compliance with any requirements of the scheme rules) to become an active member under the arrangements.
(4) Subsections (5) and (6) apply where a worker becomes an active member of a pension scheme in pursuance of a notice under this section and, within the period of 12 months beginning with the day on which that notice was given—
(a) ceases to be an active member of that scheme because of any action or omission by the worker, and
(b) gives the employer a further notice under this section.
(5) The further notice does not have effect to require the employer to arrange for the worker to become an active member of a pension scheme.
(6) But any arrangements the employer makes for the worker to become, within that period, an active member of a pension scheme that satisfies the requirements of this section must be made in accordance with regulations under this section.
(7) A pension scheme satisfies the requirements of this section if—
(a) it is an occupational pension scheme or a personal pension scheme,
(b) it is registered under Chapter 2 of Part 4 of the Finance Act 2004 (c. 12), and
(c) in the case of a personal pension scheme, there are, in relation to the worker concerned, direct payment arrangements (within the meaning of section 111A of the Pension Schemes Act 1993 (c. 48)) between the worker and the employer.’.

James Plaskitt: Sir Nicholas, we appreciate the kind comments you made about my hon. and learned friend. I will do my best to substitute for him for these clauses.
This group of amendments to clause 8 seeks to insert a new clause and to make associated consequential amendments. The new clause facilitates voluntary pension saving, to workers without qualifying earnings, which means those earning below £5,035 for the 2006-07 earnings terms. We always intended that this group of workers would have a gateway of access to workplace saving and this clause provides that necessary access.
However, these workers’ circumstances are not the same as jobholders’ because they do not have qualifying earnings. Therefore, minimum employer contributions would not arise. Any employer contributions would be voluntary. It would be wrong to automatically enrol workers in this group in pension saving by offering them an employer contribution, as they are likely to have high replacement rates from state provision alone. Some workers in this group, however, may want to save and it may be in their interest to do so—for example if they have previously saved, but have decided for whatever reason to reduce the number of hours they work in the run-up to their retirement, or those combining part-time work with childcare.
In those cases, we want to facilitate easy access to pension savings if these people feel it is appropriate for them. While we would not compel employers to make pension contributions for this group of workers, many employers might volunteer to do so, and indeed some already do. Employers might already offer these workers access to the same schemes as they offer other jobholders, and we want to ensure that these workers have access to pension schemes. In these circumstances, this clause requires employers to enrol these workers into a pension scheme with the same core of requirements that apply to qualifying schemes for other jobholders.
That said, we remain mindful of the potential burdens on business, which is why we would not require employers to enrol a worker more frequently than once every 12 months. The new clause also provides that the process by which a worker becomes an active member of such a pension scheme will be established by regulation. Alongside the new clause are a number of consequential amendments, including amendments to clause 8, to ensure that requirements on the provision of information, deduction of contributions, and compliance apply equally to this group of people.

Andrew Selous: Thank you, Sir Nicholas. Let me welcome you back to the Chair and immediately express my hon. Friends’ sympathy and condolences to the Minister. His is a sad loss and I am sure the whole Committee would share these sentiments.
I am pleased to see this series of Government amendments to the Bill. They are a useful addition and we support enabling workers earning less than £5,035 with any one employer to contribute to personal accounts. I note that the Minister said that the employer will have the option to pay voluntary contributions and that some employers currently do that. In a competitive marketplace, employers may need to consider that in order to get the people they want to work for them. So the addition is absolutely excellent. Concern has been expressed that lower-paid workers would be losing out and this gives them at least the option to joint the personal accounts scheme. Let us hope that many of them will choose to do so and will then receive the full contribution from their employers to which they will be entitled as and when, hopefully, they go on to earn more than £5,035.
I would be grateful if the Minister addressed one question. The explanatory note to amendment No. 123 talks about the provision of information to workers without qualifying earnings. We are debating the area of information in advance of the Thoresen review and are therefore somewhat in the dark, but I presume that that information will need to be slightly different, given that the employer’s contribution will not be there as of right and that that may therefore affect the considerations of lower-paid employees as to whether they have personal accounts. Will part of the generic financial advice that jobholders receive relate specifically to workers earning less than the lower qualifying earnings limit?

Paul Rowen: I associate myself with the remarks made by you and others, Sir Nicholas, about the Minister’s bereavement.
I also welcome new clause 8 and the amendments that follow from it. It is important that all workers are given the option of entering into a pension savings scheme, and the clause and the amendments do that. That option is welcome in view of the discussion on Tuesday about workers who may have multiple jobs and do not exceed the £5,035 threshold on each individual job but for whom nevertheless there may be considerable advantages in being able to enrol. Like the hon. Member for South-West Bedfordshire I have questions about Government amendment No. 123 on the sort of information that will be made available and I hope that the Minister can clarify when it will be made available. The type of information will clearly be different and possibly much more complicated than that which would be available for someone earning above the threshold. There needs to be some sort of provision to ensure that a proper assessment can be provided for people in multiple employment because the obvious corollary to that could be that they might automatically not take advantage of the benefits of the scheme because the long-term benefits are not clear. I hope that that can be clarified.
I understand why the employer’s contribution is not mandatory, but I hope that once the scheme is in operation we will try to encourage as many employers as possible to make a contribution. In terms of good employment practice and encouraging people. If people want to reduce their hours because they are bringing up a family or have reached an age at which they want to scale down their working commitment, it would be good practice on the part of the employer to make a contribution. I hope the Minister will clarify his position on that, but I welcome the proposals that this new clause and the accompanying amendments deliver.

James Plaskitt: I am grateful to the hon. Member for South-West Bedfordshire and the hon. Member for Rochdale for expressing their support for this Government amendment. There are 1.7 million people in the category we are thinking about, and this opportunity will be very important for many of them. Those people will want a scheme in place to take this up. It is right that this degree of extra flexibility be put into the provision.
Our questions relate to the information side of this. I do not want to anticipate the next group of amendments, which focus more specifically on the issue of information supplied. Suffice it to say that the Bill retains considerable flexibility about the provision of information to jobholders. I do not accept the hon. Member for Rochdale’s suggestion that the circumstances that will pertain to this group are necessarily much more complex. Employers will have a role in providing information to that group. At the very least, employers will need to provide information about the scheme in which they have enrolled the jobholder and the jobholder’s right to opt out.
However, the information to be supplied at this point is fairly basic, and I do not think we will depart substantially from the information that will be supplied to workers who are not in this particular category. After all, the emphasis, here, is on schemes that are simple, and sets of choices for individuals that are also simple. We will have the opportunity to go into this issue in more detail in the next section of the debate.

Amendment agreed to.

Paul Rowen: I beg to move amendment No. 83, in clause 8, page 5, line 7, leave out paragraph (c) and insert—
‘(c) that every jobholder shall be entitled to one-to-one generic advice either by phone or in person;
(d) that the advice shall be publicly funded; and
(e) that the advice shall be independent’.

Nicholas Winterton: With this it will be convenient to discuss amendment
No. 85, in clause 8, page 5, line 7, at end add—
‘(3) The funding for information provided under subsection (1) must be equivalent in value to no less than 0.05% of all money saved through the personal accounts scheme.’.

Paul Rowen: As the Minister said, these amendments give us an opportunity to discuss issues regarding the types of information that should be made available. Amendment No. 83 stipulates three things. First, that every employee should be entitled to a one to one session with an adviser, by phone or in person, and we believe it is important that each person is able to choose whether their session is conducted by phone or in person. Secondly, we believe it is very important that this be publicly funded, and some of the evidence that has been presented supports that view. Thirdly, it should be independent. Amendment No. 85 sets some limits as to what that advice should cost. We have suggested that it should be no less than 0.05 per cent. of all the money saved through a personal account scheme. I will explain that later.
We all know that personal accounts are beneficial for the vast majority of people but, for a clear number of them, saving through a personal account may not be the right option. It is important for the individuals concerned to make an informed decision about whether they would be financially better off by saving through the personal accounts system, a decision which is all the more essential when we consider that people will be automatically enrolled unless they decide to opt out. Various factors need to be taken into account when deciding whether to opt out. There are obviously some clear principles, and we can develop some generic advice; nevertheless, there are going to be huge variations as to whether a particular person can benefit.
A large number of factors, which affect the suitability of personal accounts, need to be taken into account. For example, in the last sitting we discussed the age factor. We tabled a probing amendment, which the Minister dealt with, about whether 50 was an appropriate age. Clearly, there was an issue there, but there are others: current and projected earnings, for example; multiple jobs, and how those vary over time, which we have mentioned; time taken off work or planned time off; the possibility for additional overtime; the level of employer contributions available—particularly, as we have already said, for someone who is earning less than the threshold, where that contribution could make a big difference—and whether putting that into a personal account is worthwhile; the tax treatment; and the levels of other savings and of indebtedness that a particular person might have.
In my view, it is important that advice be given to people who may have debts from other activities that they have engaged in. Clearing that debt really ought to be a priority for them, before they start saving. A generic package, which does not allow for some sort of advice, does not allow that sort of discussion. We already know about the level of indebtedness that has risen alarmingly in the past few years; so, for many people, dealing with credit cards and paying off such high-interest debts ought to be a much greater priority than they are being given.
We believe that the scheme should be publicly funded. A range of stakeholders that have written to the Committee made that clear. The CBI, for example, said that employers must not be responsible for providing advice on savings. Advice is for the delivery authority and the Government to give. Which? Said that there is a need for advice both on the initial decision to opt out or not and on the ongoing decisions. The TUC said the same, so it is important that that advice be publicly funded. The mandatory employer contribution will already put a huge strain on employers. We believe that it is important to work with everyone to make the scheme work. It must be publicly funded.
The information that is provided must be independent. We know that, in the past, advice on second pensions may have been mis-advice. Later clauses in the Bill deal with this. It is very important for the integrity of the scheme that advice is clearly independent and is seen to be independent, so that employers can concentrate on the other issues they will have to deal with in setting up and broadening the scheme for a group of employees that, in the past, has not had access to a pension saving scheme.
We also believe, however, that the Government must be kept at arm’s length from this advice. While they may well have to fund it, they should not be involved in the details. The Government obviously have an incentive to play down potential problems, such as mass means-testing, in order to boost the numbers. An amendment that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey moved on Tuesday requested some sort of assessment of how contributions affect people’s benefits and whether there is a cut-off point beyond which it would clearly not be beneficial for certain individuals to enter the scheme. We need to ensure, therefore, that members of the public have easy access to information when deciding whether to opt out—or opt in, if they do not automatically meet the threshold—and at stages throughout their working lives, because circumstances do change.
Amendment No. 85 deals with funding. According to the Government’s impact assessment, the average annual contributions to personal accounts by employees, employers and the Government will be around £15 billion a year, and 0.05 per cent. of that is £7.5 million. To put that in perspective, the citizens advice bureau’s budget last year was £43 million. It has 27,000 people working for it at the moment, but 20,000 of them are volunteers. When the Government set up the financial inclusion fund, they gave the CAB an additional £10 million, enabling it to employ nearly 400 specialised debt advisers. Clearly, £7.5 million is not a huge sum. It will not deliver hours of advice for workers, but it is clearly important that we set a minimum level of advice.
If we are talking about personal accounts leading to another 6 million to 9 million people saving in a workplace pension scheme for the first time, that is only about £1 spent on advice for each new saver. I accept that is a ballpark figure. Circumstances will change; some people will not need the advice provided; they may well have their own arrangements in place. Others—and sadly there are a large number of people whose earnings fluctuate and whose employment patterns are not regular—will need to make more use of that advice.
Given present levels of personal indebtedness, it is very important that the option be there. It is not just a straightforward question about what someone will save over a period of time. For many people there are other priorities concerning their own level of personal indebtedness. We believe that this independent advice, which allows for a face-to-face meeting, will be much better and will enable a discussion to take place. It is very important for the success of this scheme that that source of independent advice is provided and I hope the Minister sees fit to accept the points we are making in our amendments.

Andrew Selous: I am sure that all members of the Committee share the wish of the hon. Member for Rochdale that we get this whole aspect of information right. He is right that this is a crucial area in terms of getting personal accounts off to a good start. I noticed during his speech that, like many of us, he used the words “information” and “advice” almost interchangeably. He was not alone in that. I have been looking back at the evidence from our session on 17 January, when the Minister for Pensions Reform, the hon. and learned Member for North Warwickshire, spoke about the important distinction between information and advice. He went on to say:
“although it is not always easy to make it in practice.”—[Official Report, Pensions Public Bill Committee, 17 January 2008; c. 117.]
So here we have a Government Minister recognising the difficulty of this aspect.
I note that Otto Thoresen himself has described generic advice as—to quote a briefing from Age Concern—
“providing information and guidance to people, better equipping them with the tools to make informed decisions.”
I would be interested to hear what the Minister has to say about the distinction between information and advice.

Paul Rowen: Does the hon. Gentleman accept that, in the context of what I was trying to do, where I was talking about people who might have credit card debts or other indebtedness, for them it is not just a simple question of what they can save. Some sort of advice has got to be given. They would still make the decision, but they would have to balance priorities. They need to have the point made to them that it might be best to sort their debts out first before starting to save.

Andrew Selous: I completely agree with the hon. Gentleman, and I intend to mention some categories of people who would generally not be well advised to take out personal accounts. But I do think it is important that we define any legal difference between information and advice, given that we are just now coming out of the whole mess of the 140,000 people who have had to go to court in this country and in Europe to sort out what happened to their pension savings, given that they believed they were relying on assurances in Government leaflets.
So there is a question of liability. None of us wants to be in a position in years to come where we will have to set up another type of financial assistance scheme to deal with people who have set up personal accounts when they should not have done so. The hon. Member for Rochdale is right that there are some people who should be paying off debts, particularly if they are debts on which they are paying extortionate rates of interest. This is unfortunately the situation that many people find themselves in, whether through credit card debt or debt from various finance houses or other dodgy organisations that seem to advertise continuously on daytime television—particularly offers to take all people’s debts and put them in one place.
I have had a stream of constituents in unbelievable financial difficulties because they thought they could consolidate all their debts in one place and it would make it easier. They were paying unbelievably high rates of interest—literally more than 100 per cent. in some cases. The hon. Gentleman for Rochdale is right that those people should be advised above all else to get rid of that debt before they take up a personal accounts scheme.
Age Concern, in its briefing to the Committee, also went on to say:
“For example a personal account is unlikely to be suitable for a single person who is a tenant, is approaching 65, and has never paid into a private pension.”
There will be various categories of people for whom personal accounts are not the right way to proceed with their finances.
There are concerns that simple generic advice will not satisfactorily apply to millions of auto-enrolled employees. It is interesting that financial advice that is given at the moment to people who are taking up pension schemes has to take account of every aspect of a person’s financial affairs, including, crucially, any possible future entitlement that they might have to means-tested benefits. I would be grateful if the Minister gave some indication of the likely shape of the advice. I am particularly interested in whether it will be themed into addressing different groups of workers, perhaps in relation to different income scales or different sets of circumstances. Will it have worked examples, showing that most people will be better off but that people in some categories should think seriously about whether it makes sense for them? Will there perhaps be a flowchart to take people easily through the advice?
Many people are put off by reams and reams of text in long paragraphs and are not able to work their way easily through it. The advice has to be easy to understand, clear and simple. One of the reasons that many people are not involved with pensions in the first place is because they are incredibly complicated. The need for simplicity has been a hallmark of the debate so far. Although we are debating the issue in advance of the Thoresen review, it is important that we try to tease out from the Minister as much Government thinking on the subject as we can. I look forward to, and would be grateful for, what the Minister has to say.

James Plaskitt: I appreciate the contributions of the hon. Members for Rochdale and for South-West Bedfordshire. Before I turn in general to the amendment let me respond to some of the points that have come up.
As the hon. Member for South-West Bedfordshire rightly pointed out, the hon. Member for Rochdale slid imperceptibly between information and advice in moving the amendment. It is a minefield as we know, and it is important to establish with as much clarity as possible the distinctions between the two. Not only did he slide rather too easily from one to the other, he also widened the area of consideration on information and advice beyond pension decisions and spread it right out into the issues of personal finances in general, people dealing with their debts and other financial decisions. It is asking too much of the information system that will accompany the introduction of personal accounts to expect it also to be the means by which comprehensive financial advice is given. Not that that is not required—it is—and not that it does not exist; it does already exist in other areas, and I would not want to try to replicate within this field of information the things that he rightly sees as being necessary.
The hon. Member for Rochdale rightly said that some people are struggling with debt. The hon. Member for South-West Bedfordshire said the same. We know that, but the appropriate way to deal with it is through programmes such as the financial inclusion projects that the Government have under way, part of which is state funding; for which the hon. Member for Rochdale was calling. The placement of independent financial advisers in citizens advice bureaux is precisely the sort of help that his constituents need, so the Government are putting resources into that provision. That is a more appropriate place to be locating general financial advice, as opposed to the specific area of pensions.
Another thing to do, which also picks up a point of the hon. Member for South-West Bedfordshire, is to address the issue of unaffordable credit. The way to address that problem is through the funding now going into expanding the provision of affordable credit. Growth fund investments are being made in almost all parts of the country; by expanding credit unions, for example, we are putting in place affordable credit to replace the 100 per cent. interest—and, worse, 1,000 per cent.—deals that some people are suffering from.

Andrew Selous: I take the Minister’s point that we cannot expect generic financial advice for people on the entire multiplicity of financial issues that they will face in their lives. However, the hon. Member for Rochdale has a point. People will not decide in a vacuum whether to go into personal accounts. Would the Minister envisage—without committing him in any way—that it might be appropriate for the advice to say something like, “If you have high debts, you may wish to consider this issue before proceeding with personal accounts”? That would not be too specific, but would flag up an area as one where the person concerned should perhaps speak to the citizens advice bureau or some other person who can give competent advice.

James Plaskitt: I understand why he wants to press me, but he will anticipate what I am going to say. Otto Thoresen is looking at those questions. It is sensible to await his recommendations. The hon. Gentleman has seen interim reports, and clearly the Thoresen review will address such issues. We ought to see what recommendations come out and then work with the delivery authority—the Personal Accounts Delivery Authority—to build the appropriate mechanisms and ensure that they are in place before personal accounts are launched and before auto-enrolment starts. We must ensure that the right bits of information are given, the right advice is available and the right pointers are there for people to find the required advice. We also have to bear in mind, as we have said repeatedly, the burden on employers. We have covered that already.
During the hon. Member for Rochdale’s contribution, he asked me what information is to be provided. To help him, I will explain what constitutes information in that respect and what information we would expect to see included at the point of auto-enrolment. Information included would be, for example: the conditions of eligibility; the relevant joining processes; how contributions, tax relief and benefits are calculated; the arrangements for making additional contributions; survivor benefits under the scheme; transfer rights; periods of notice to terminate membership; what benefits are payable under the scheme; annual illustrations of benefits at retirement; and procedures for disputes. Those are clearly matters of information; they certainly do not stray into the area of advice. Those are simple points of information, which people will need to understand the implications of the schemes that they have been enrolled into.

Paul Rowen: I was clear about the need for advice and not just information. Notwithstanding the Thoresen review, does the Minister not accept that people do not make decisions in a vacuum? Part of the problem in the past with pensions was that all the benefits were explained up front and no information was given about how they affect individuals. For many people at the lower end of the scale, some of whom I deal with as constituents, that is often the problem. There is a multiplicity of agencies and whatnot providing benefits advice, and I believe that can complement what the Government are doing through their financial inclusion scheme. I want to see them dovetail together. If they do not, we will have a separate institution providing advice which will not fit in with that provided by the CAB. That is why we say it should be publicly funded. I want to see that sort of joined-up thinking to ensure people get that sort of advice. It is advice that is needed, in my view, and not just information.

James Plaskitt: I understand exactly where the hon. Gentleman is coming from. However, I do not think it appropriate to place all these duties on the information given about personal accounts. That would overburden it. One of the reasons we have in the past seen undersaving towards pensions, which is what we are trying to address, is that there has been an element of fear, driven by complexity and by some accidents in recent history that have coloured perceptions.
The point of this reform is not only to engage people with it via auto-enrolment, but to put in place schemes that are simple, to try to remove this legacy of fear about pensions. It is therefore important to keep the schemes simple, and not to attach to the process of being automatically enrolled a whole bundle of information and—as the hon. Gentleman would have it—advice, which can appear complex and difficult to understand. That might regenerate exactly the sort of fear that has led to people not taking up pensions, especially in the income bracket we are looking at. The hon. Gentleman needs to consider these things in balance. I will turn now to some of the more substantive points that have come up, and deal with the other points he has made about funding these arrangements.
Clause 8 recognises that individuals will need access to relevant and accurate information when they are automatically enrolled, as in any other circumstances when they are making decisions about their retirement. It requires us to specify in regulations the information that must be given to jobholders about the employer’s duty and how it will affect them. I have given some indication as to what that might be. In particular, it requires that prescribed information be provided about automatic enrolment, the benefits under the scheme and the right to opt out. Some of this information will come from schemes and be borne by scheme membership charges.
We do not believe that people will need one-to-one guidance as the hon. Gentleman suggests. As a result of the employer contribution most people will benefit from auto-enrolment and therefore enjoy a better income in retirement. We already produce information on retirement planning alongside a number of other organisations—such as the CAB, the Pensions Advisory Service and the Financial Services Authority—which provide a professional and trusted service. As I have indicated, the Thoresen review and the Government's action plan on financial capability will add to the services on offer. We will work with these and other organisations to ensure that a coherent and consistent range of good-quality information and help is available to those who are making decisions about their retirement.
Let me now turn specifically to amendment No. 83. The hon. Gentleman suggested that all those auto-enrolled should be entitled to publicly-funded, independent, one-to-one generic advice. Of course, some individuals may wish to seek guidance. That is the case in any financial decision. And that is why we have asked Otto Thoresen to consider how a national generic financial advice service should be provided to answer queries across the whole range of personal finance issues. However, we do not agree that one-to-one advice will be needed on this particular issue by most people. There is no legal requirement at present for individuals to receive one-to-one advice before they join a workplace pension scheme.
There is no legal requirement at present for individuals to receive one-to-one advice before they join a workplace pension scheme. Furthermore, given that the aim of our reform is to increase pension saving, I have strong reservations about building a heavyweight process around automatic enrolment, which might only serve to send the wrong message to people and encourage them to opt out without good reason.
Giving people legal entitlement to one-to-one advice will suggest that we, the Government, consider that such advice is needed. That in turn will give the impression that automatic enrolment is something risky and complex. That is precisely not the impression we want to give. We all agree that, for most people, automatic enrolment is a beneficial opportunity that ought to be welcomed. We need to avoid at all costs encouraging people who would benefit from it to opt out.
We plan to work with all the existing services, and with those like Thoresen, who are developing further provisions in this area, so that all the information that people need will be available and easily accessible. Inserting rigid—and inappropriate—requirements into primary legislation is not the way to deal with the issue. I have concerns also about his suggestion to write 0.05 per cent. into the Bill as a means to achieve the public funding that he wants. I heard his explanation of where he obtained this figure, but even after he told us where it came from, he was quickly thereafter talking about “ballparks”, which suggests that there is not anything terribly scientific about it. Yet he wants to write it on the face of the Bill. I do not think it would be appropriate to put into statute a figure that has a little bit of a “wet finger in the air” sense about it. It could risk putting into statute obligations to raise money from these sources which might not be necessary and could therefore be wasted.
In addition, this amendment would leak the costs of providing information on the overall reforms to the funds in just one qualifying scheme. It is difficult to see how that could be appropriate. However, I can assure the Committee that we take the issue of the provision of information very seriously. We see the information strategy as an absolutely central plank of these reforms.

Andrew Selous: I would be grateful if, before we conclude our debate on clause 8, the Minister said something about two areas. The first is liability: will people be able to sue if they think they have done the wrong thing through being auto-enrolled on the basis of this advice? We do not want a repeat of the financial assistance scheme difficulties. Secondly, what about the position of those large employers who would be happy to give some information in this area? Are they going to be prevented from doing so? I fully accept that most employers would want to be a mile away from having to give any advice in this area, but some of the bigger employers might actually want to. What is his position about that?

James Plaskitt: On the issue of liability, there is quite a clear distinction here. That is going to arise when the product is sold. Clearly, we are not talking about that in terms of automatically enrolling people. I do not believe that issue arises. As for the point about larger employers wanting to give information, a lot of information is already given. We are not trying to proscribe or limit the information employers might want to offer. What is important is that when the schemes are ready to be introduced—from 2012—we will have established clearly what information needs to be given to employees who are automatically enrolled. I read out the types of information that will be included and that information needs to be standard across the piece. I am sure that if employers want to add additional information they will not be restricted in doing so. The general atmosphere around the provision of information and advice will be clarified once we respond to the Thoresen review.

Andrew Selous: The Minister said that liability arises when a product is sold. Where those 140,000 people were automatically joined into occupational pension schemes that then collapsed the Government found themselves in court and lost twice, in the High Court in this country and in the European Court. It is not absolutely clear to me how we will ensure that that does not happen again as a result of the Bill.

James Plaskitt: I have done my best to make it clear. I think that there is a distinction; we are not talking about the same thing. Automatic enrolment into pension schemes that must meet the minimum specification laid down as a result of the legislation is a substantively different process to that to which the hon. Gentleman refers. I hope that I have been able to deal with—no, I have not, I will give way once more.

Paul Rowen: I have listened carefully to the exchange that has just taken place. The Minister has not addressed the issue of independence and some of his remarks have concerned me a little. “Independent” in our amendment specifically refers to advice and I, like the hon. Member for South-West Bedfordshire, get a little concerned when it does not seem that there will be a clear distinction regarding types of advice, that we will not have the word “independent”. Maybe the advice will be generic and clear and perhaps that will be addressed once Thoresen reports. If employers can give additional advice there is a risk of repeating the problems of the past with regard to second pension schemes and we do not want that to happen.

James Plaskitt: We have already established, and I have tried to make it clear, that an employer giving advice would probably do so through an independent financial adviser, who would assume liability. Most employers do not give advice; they give information. No Government can safeguard against liabilities and that is why it is important that we get the information right, that we do not rush into making decisions about it, and that we take on board the report that we are awaiting from Thoresen. I hope that I have now managed to deal with the points. The debate has been useful and I hope that in the light of what we have said the hon. Member will feel able to withdraw his amendment.

Nicholas Winterton: Before I call the hon. Member for Rochdale I have to remind the Committee that I am obliged to adjourn in two minutes’ time, at 10.25 am.

Paul Rowen: I will not detain the Committee. I appreciate what the Minister said and I am happy to withdraw the amendment. It was important to have the debate and express some of our concerns. We will return to the issue once Thoresen reports and will perhaps have further debates on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8, as amended, ordered to stand part of the Bill.

It being twenty-five minutes past Ten o’clock The Chairmanadjourned the Committee without question put, pursuant to Order of the Committee.

Adjourned till this day at One o’clock.